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In mid-2006, Overstock.com faced a daunting set of business challenges. Founded in 1999 as an online "closeout" retailer, the $800 million company had more than 15 million unique visitors a month, 10 million life-to-date customers, and greater than 500,000 active SKUs in roughly 20 product categories. However, while it had come within one half of a percent, the firm had yet to realize an annual profit. Moreover, the tremendous growth that had enabled the company to become on online shopping giant appeared to be slowing at an alarming rate. At least partly as a result of the challenges facing the core business, Worldstockthe company's socially responsible initiativewas also in jeopardy. Started by CEO Patrick Byrne in 2001, the division leveraged the firm's infrastructure to market handicrafts produced by third world artisans to the mainstream U.S. retail market via a designated portal on the Overstock.com website. However, working with third world artisans turned out to be significantly more expensive than originally anticipated. By mid-2006, Worldstock's "self-sustaining" model for economic development was projected to contribute nearly $1 million to the company's losses that year. Although most managers were cautious about criticizing the CEO's "pet project," a few felt the company had to address (what they saw as) the negative the impact that Worldstock was having on Overstock's financial performance. As a result, all those committed to the Worldstock model, from CEO Byrne to Division Manager Angela Ramirez, faced the thorny questions about how to balance these new fiscal imperatives with the group's philanthropic and social objectives. While no one wanted to openly acknowledge it, some stakeholders wondered if Worldstock might eventually be shut down or spun off if the situation did not improve.

learning objective:

The objectives of this case are to: • Explore the advantages and disadvantages of embedding a socially responsible initiative within a for-profit company. • Evaluate the sustainability of the Worldstock model.

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Set during the years surrounding the market crash of 2000, Entrepreneurs Foundation (EF) is a strategy case that discusses a number of challenges facing non-profit managers, including 1) establishing a sustainable and self-supporting operating model, 2) generating corporate-sector support, and 3) managing through a financial crisis. The case begins in the boom times of the late nineties, and describes EF's innovative and profitable operating model based on leveraging stock appreciation in technology startup companies to fund community service programs. The case continues through the market crash of 2000, the near collapse of EF and its portfolio, and the restructuring led by EF's management in 2002.

learning objective:

The learning objectives of this case are to encourage readers to explore self-supporting non-profit operating models, understand the challenges of managing through a financial crisis, and develop creative ideas for engaging entrepreneurs, and the corporate sector, in social initiatives.

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Established in the mid-1970s, microfinance provided tiny loans to poor families to help them start and/or expand small businesses. Thirty years later, the practice had helped more than 80 million people to lift themselves out of extreme poverty and grown into a global industry comprised of more than 3,000 microfinance institutions. Early pioneers of microfinance, such as Muhmmad Yunnus of Grameen Bank, had become celebrities of sorts, receiving scores of humanitarian awards, including the 2006 Nobel Peace Prize. Similarly, the microfinance movement itself had become so well known that it invited comments from mainstream cultural icons such as Bono, lead singer of the band U2, who said: "Give a man a fish, he'll eat for a day. Give a women microcredit, she, her husband, her children, and her extended family will eat for a lifetime." Despite these accolades, Geoff Davis and Mike Murray believed that while microfinance was an important social innovation, it was dramatically underperforming relative to its potential because it had yet to achieve adequate scale. They pointed out less than 20% of the world's demand for microfinance was being met. Murray observed, "Usually, an industry that had those dynamics would have been closed down." Prompted by their vision of microfinance's potential, they founded Unitus, Inc., a nonprofit focused on accelerating the growth of the microfinance industry so that vastly larger numbers of people could gain access to the capital they needed to generate an income, raise their standard of living, and fulfill their basic needs. Explores dynamics in the microfinance industry, describes the Unitus business model, and sets up an important decision facing the company: whether to expand the amount of capital it can provide to its microfinance partners through the creation of a debt or equity fund.

learning objective:

To expose students to emerging trends in the microfinance industry and in particular to examine some the challenges limiting the growth, scale, and impact of the field. In addition, explores Unitus' efforts to support and transform microfinance institutions by providing them with greater access to capital and capacity-building in order to enhance their impact.

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In October 2004, SpaceShipOne rocketed into space, winning the $10 million Ansari X PRIZE. This competition for the first privately funded, manned spaceflight was organized by the X PRIZE Foundation, and attracted 26 competitors, who had spent more than $100 million in pursuit of the prize. The success of SpaceShipOne generated intense media and public interest. Many of the competitors for the Ansari X PRIZE also planned to continue their efforts to develop commercial spaceflight businesses. After this success, Peter Diamandis, founder and CEO of the X PRIZE Foundation considered the future of the foundation. He saw three options: shutting down, continuing with a focus on space, or creating a "world-class prize institute that uses the prize-incentive model to solve today's grand challenges." He chose the third alternative, with the vision of developing 10-15 prize competitions. The foundation chose to work on fields including space, medicine and genomics, energy and transportation, education, and other social challenges. Describes lessons learned about prize competitions through the Ansari X PRIZE program. Discusses issues in creating and operating a successful competition, as well as the advantages of using incentive prizes, including bringing new thinking to bear on difficult problems and paying out only when an important goal is accomplished (paying for results, not effort). Poses several problems facing the Foundation as it begins to focus on fields outside of space: could prize competitions work in fields that were not technology-centric (such as poverty); could the organization scale up to support as many as 10-15 competitions; and what areas should the foundation focus on. Finally, could the prize model revolutionize philanthropy by using financial incentives to stimulate investment in important fields and leverage philanthropic dollars by paying only for results?

learning objective:

To allow students to consider non-traditional means of achieving important objectives, and ways in which philanthropic funding can be used to stimulate private investment to address difficult problems.

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Iftekhar Enayetullah and Maqsood Sinha, co-founders of Waste Concern in Bangladesh, had earned an international reputation for their innovative approach to dealing with the vast quantities of waste that threatened to overwhelm the overcrowded city of Dhaka. Having just been recognized by the Schwab Foundation for Social Entrepreneurship as "outstanding social entrepreneurs," the two were eager to take Waste Concern to the next level. Their ambitions included scaling up their waste processing operations, introducing new technology, and creating a new trading business selling credits for the reduction of greenhouse gas emissions under the framework develop by the Kyoto Protocol. Describes Waste Concern's model and details two opportunities to raise capital from large foreign firms that would provide the funds to grow the organization. Enayetullah and Sinha were concerned not only about the financial aspects of the two offers but also about the objectives and philosophies of the two suitors. Enayetullah and Sinha wanted any decision to be consistent with Waste Concern's goal of promoting Kyoto Protocol-related (Clean Development Mechanism) projects throughout Bangladesh and converting waste into a resource to benefit the poor.

learning objective:

To explore dynamics and mechanisms of social innovation, and the challenges faced by social entrepreneurs in establishing and growing a new venture.

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Headquartered in St. Paul, Minnesota, Minnesota Public Radio (MPR) started as a small public station that 26-year-old William Kling established at St. John's Abbey and University in Collegeville, Minnesota in 1967. By 2004, Kling's venture had grown into a regional network of 38 stations, serving more than five million people. The organization had more than 83,000 members and boasted the highest percentage of listener membership of any community-supported public radio network in the nation. Much of MPR's growth and success had been built through what Kling referred to as "social purpose capitalism...the application of the traditional principles of capitalism...to a nonprofit organization [to] benefit the public sector." Kling's first foray into "social purpose capitalism" was in 1981 when Garrison Keillor, the popular host of "A Prairie Home Companion," wanted to reward loyal listeners with a free poster of "Powdermilk Biscuits," an allusion to a fictitious sponsor that was part of a Prairie Home gag. The giveaway drew over 50,000 responses, much more than originally anticipated, costing $60,000. To avert financial ruin, Kling printed an offer for other products that listeners could buy on the back of the poster. Netting $15,000 to $20,000 from that poster convinced Kling that there were opportunities to secure MPR's financial situation. Kling created a number of for-profit ventures to support and build the MPR empire. By 2004, however, MPR and Kling were the subject of unrelenting public criticism. Ostensibly, the issue was MPR's unwillingness to disclose Kling's compensation from the private for-profit enterprises spawned by MPR. After disclosing this information, Kling became the subject of condemnation amid accusations of conflicts of interest and nepotism. Knowledgeable observers, however, saw the real concern to be fear that a public benefit organization was being driven by profit-making priorities.

learning objective:

To introduce the concept of "social purpose capitalism" and explore how this model influences the goals and direction of a not-for-profit organization. To discuss and evaluate the implications of a social purpose capitalism model on both the non- and for-profit entities involved.

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Established in the late 1960s, Interplast was the first international humanitarian organization to send American medical professionals overseas to provide free reconstructive surgery to children and adults in developing countries. Over the next 30 years, Interplast grew from an informal volunteer-led effort into a professional organization. By 2000, Interplast had over 2500 volunteers, had sponsored trips to 30 countries, and performed over 3000 surgeries each year. This case is intended to be used a background reading for the companion videocase, "The Evolution of Interplast," which details the organization's growth and the debates that arose as it began to shift its focus from direct service (sending surgeons and other medical professionals overseas provide reconstructive surgery) to education, (investing in training foreign doctors) and empowerment (providing resources and infrastructure) so that these local professionals could serve their own population. The videocase chronicles the debate over this shift as well as related policy decisions, raising issues of organizational evolution, strategic change, and nonprofit governance.

learning objective:

To explore organizational evolution and governance in the context of srategic change in a volunteer-based nonprofit nonprofit organization.

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Founded in 1989, Teach for America (TFA) was a nonprofit organization that placed highly qualified college graduates into 1,000 under-resourced urban and rural public schools across the country to teach for two years. The enthusiasm of the founding members inspired thousands of college graduates to take up the mission of eliminating educational inequalities throughout the country. Applicants for fall 2001 were twice what TFA had expected and applications for spring 2002 would be exceptionally high as well. Without drastic efforts to expand the number of placements, however, the organization would probably not be able to place all of the admitted applicants. Thus, the national office was asking many of its regions--and especially the Bay Area because of its popularity with applicants--to accommodate as many new corps members as possible. The Bay Area region placed its corps members into two local school districts and although relations with both were very positive, each district only held capacity to take approximately 40 corps members each year, for a total of 80 placements. Bay Area staff immediately realized that to grow up to 150 placements for the next year, they would need to expand the TFA program to a new school district. San Francisco Unified (SFUSD) seemed like a good candidate. SFUSD had recently hired a new superintendent (a long-time supporter of TFA) and served an incredibly diverse student population, much of which consisted of low-income, underprivileged children--exactly the kind of students TFA targeted. Expanding to SFUSD posed challenges as well and TFA Regional Staff had to determine the best option for quickly creating a large number of new placements.

learning objective:

To explore strategic and management issues associated with growth and scaling in social entrepreneurship, and the challenges involved in working and innovating in the context of public education.

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